Buying a Business

Discussion in 'Lawn Mowing' started by Green Acres, Dec 30, 2000.

  1. Green Acres

    Green Acres LawnSite Senior Member
    Posts: 316

    I know we have talked about this before. But,I just talked to a guy who wants to sell his company. Last years net was $355,000 and he brought home $160,000 with $100,000 in equipment. I think he said around 185 customers mostly lawn care and maintance. So I asked what he wanted out of it and he said something like $160,000 times 2.5 years plus equipment. So if you do the math that equals $500,000. I think maybe he meant to say months but not sure. Is his company really worth $500,000?
     
  2. Lawnworks

    Lawnworks LawnSite Fanatic
    from usa
    Posts: 5,407

    I don't think it is a good deal. If I were you I would just spend alot of money on advertising. In two years you could have 100 profitable accounts. You never know if the customers will keep using you, and you don't even know if he is telling the truth. 500,000 is alot of money. I would give him $80,000. Even that is a big investment. Just my opinion.

     
  3. Runner

    Runner LawnSite Fanatic
    Posts: 13,494

    You don't even TOUCH a deal like that without an attorney!!!
     
  4. Richard Martin

    Richard Martin LawnSite Fanatic
    Posts: 14,700

    Lawn services usually bring 10% of 1 year's gross receipts payable as receipts are received over the course of a year. Customers are easy to get especially in metro areas. His company is worth $35,000.00 plus the value of his used equiptment (not much).
     
  5. Richard,
    As to the value of the business, I agree with you.

    Your comment about it's easy to get clients in metro area's, I wouldn't say it's easy. Got to look at how saturated the market is. Come take a look in the San Francisco Metro area. Seems like everybody who lives in the lower area of the City of San Mateo is a L.C.O.

    Happy New Year
    John
     
  6. bdemir

    bdemir LawnSite Senior Member
    Posts: 610

    I have done this a couple of times and lost bigtime. Buyiung accounts is dangerous. You have to sell yourself and prove to the customers. Temember you are going to them for work they are not coming to you. So they can leave anytime they want if they dont like the way you do it. Personally that company you are buying is way too much money and way too big if you are just starting out. I did the same thing started out big and it failed on me and my advice would be to take it easy and start from the bottom not from the top. If you start from the top then you will nopt have the experience that you need and the helpers lined up to get you started to run such a big operation. I personally would not touch that with a ten foot pole. Just trying to save you from making a big mistake. How much experience do you have with lawn maintenance?



    bdemir
     
  7. landscaper3

    landscaper3 LawnSite Bronze Member
    Posts: 1,354

    When purchasing business 1st have your accountant look at it. 2nd get a lawyer to make up contact, 3rd business is only worth 10% of gross sales equipment extra.
     
  8. bob

    bob LawnSite Platinum Member
    from DE
    Posts: 4,254

    $500,000 ! You would be working for free for a year and a half. 2 months gross would be far. (not including equipment)
     
  9. thelawnguy

    thelawnguy LawnSite Silver Member
    Posts: 2,412

    Customers may be easy to get, but its a lot harder to get the really good ones.
     
  10. capital

    capital LawnSite Member
    Posts: 118

    I looked at what you stated IE 185 accounts and a net of 355,000$. Based on what he is telling you he has low end accounts. IE he is a low baller. Why do you want those accounts? there will be no loyalty to you. IF there low ball accounts there is no other way to pump money from them. IE offering fertilizer or landscaping since the low ball accounts are not gonna spring for this. I average a little over $5,000 per account and I only do residential. I dont bid accounts and I provided one stop shopping. So like everyone else said spend some money on advertising the areas/clients you want and take it slow.
     

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